Dubai: Abraaj Capital, the Dubai-based private equity firm, said yesterday that it completed the $1.41 billion acquisition of Egyptian Fertilisers Company (EFC), Egypt's largest private-sector fertiliser manufacturer.
With this acquisition, Abraaj has more than $4 billion assets under management. The leveraged buyout of EFC through its Infrastructure and Growth Capital Fund and Abraaj Buyout Fund II is the largest so far in the region. Dubai Capital Group (DCG) and Saudi-based Rashed Al Rashed & Sons Group are co-investors in the transaction.
"This deal is driven by the sheer size of growth opportunities for the fertiliser industry in the region. We see the fertiliser industry today as what the cement industry was four years ago," said Arif Naqvi, chief executive of Abraaj Capital.
Deutsche Bank acted as advisers and provided the acquisition finance for the EFC transaction. The deal size was $1.925 billion including the $500 million debt of EFC. Out of this $675 million came from equity contributions while the remaining $1.25 million was funded through debt.
The loan syndication for the deal is fully underwritten by Deutsche Bank with $400 million raised through a sukuk issue and the remainder through debt placed with about 50 banks, Tom Speechley, executive director of Abraaj, said.
As part of the deal, Abraaj has retired the existing shares of EFC and acquired the 320 million shares, including the 30 per cent held by the Saudi Arabia-based food company Savola Group.
Despite the 100 per cent ownership of shares, Naqvi said the new owners of EFC have no plans to delist it from the Cairo stock exchange.
EFC, the largest fertiliser supplier in Egypt, has an exclusive gas supply arrangement with Egyptian government and produces granulated urea and liquid ammonia, nitrogen-based fertilisers that are widely used in Egypt, United States and Europe.
Increasing demand
"The demand for urea is increasing as a result of expanded production of biofuels such as ethanol and the growing agricultural use. As part of our regional buyout strategy we are looking at more acquisitions in the fertiliser sector," Naqvi said.
As part of its infrastructure foray Abraaj is currently in negotiation with Turkish hospital operator Acibadem Health Services, the largest health services company in Turkey, for a possible buyout.
Apart from managing its' seven private equity funds, Abraaj Capital Holdings Limited is also the single largest shareholder in the Cairo based regional investment bank EFG-Hermes.
